Understand what you're signing

Everything About Contracts

by Alex J. Coyne


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Signed and spoken contracts are an essential part of what makes the business world tick. Most people can remember the first time they penned their signature in ink, but could you tell a valid contract from a deal with the devil? Here's more about what's behind your signature, different types of contracts, and the things you should think about before you sign your name to one.

What Makes a Valid Contract

To be considered valid, a contract must contain the elements of an offer being made by one party, acceptance of that offer by another party, consideration (compensation which is sometimes, though not always, money), competency of the parties involved, and mutuality of obligation.

Some types of contracts are required to be written, according to the Statute of Frauds. Such contracts include those for the sale or transfer of property, marriage contracts, and anything for the sale of goods worth more than $500.

Lastly, a valid, legal contract must contain legal elements. This means that the terms of the contract cannot, for obvious reasons, override state or federal law.

Signatures

The word "signature" originates from the Latin "signare" or "to mark," and it is your individualized stamp on a legal document.

Events like getting married or developing changes of mobility in the hands over time might mean that you decide to change your signature; this is as simple as making a trip to your bank and letting them know. After this, they will ask you to confirm your new signature to spot any variations. Note that you will have to do the same for your Social Security documents, passports, visas, and other legal documents.

If you suspect your signature has been forged on a legal document, your first step is to contact and alert any involved parties like your bank as soon as possible. You might, by law, be required to sign an affidavit that says you believe your signature has been forged.

Verbal contracts are, in some circumstances, considered legal, but are they enforceable? It is much easier to prove either side in court with your evidence, signed and in writing.

Everything About Contracts

Contracts: Signing and Opting Out

Contracts come in many forms, shapes, and sizes. Primarily they exist to set terms and make sure the conditions of these terms are being met. Signing a contract, unless under duress (i.e. force or external pressure), is considered acceptance of its terms and conditions. Yes, it is considered acceptance even if you "didn't read it properly."

Contracts are filled with plenty of legal jargon and it's highly recommended to always have a contract read through by a legal professional. If you aren't sure what something means, ask for an explanation or do your own research thoroughly. You have a legal right to understand what you are signing before you do. In the cases where, for example, a salesperson cannot explain the terms adequately, it is recommended that you take a copy home instead of signing anything impulsively on the spot.

Want to opt out of a contract or legal agreement? Look for the cancellation clause, which should stipulate the terms by which the contract can be cancelled. Some contracts will include a cancellation fee. Terms that break the law will also void the legality of a contract, and a contract can also be considered cancelled should either party breach the terms of the contract.

  • Sales Contracts are entered into when things are bought or sold and aren't (necessarily) signed. Always keep your receipts when shopping and always have a lawyer check over agreements for larger items like a car.
  • Marriage Contracts can include pre-nuptial agreements and are generally set up with the help of a lawyer.
  • Employment Contracts are signed when you take a job. These should include your terms of employment, including your job description, hours, salary, and terms of termination.
  • Real-Estate and Rental Contracts accompany your living space (or, for that matter, office) and should be gone over carefully. They should include rental terms pertaining to things like pets (or not), utilities, rental and deposit amounts, and terms of use.
  • Loan Contracts accompany taking out a loan. They should include the loan amount, the initiation fee, and the terms of repayment, which should include the percentage, amount payable, and the amount of time.

Need legal advice?
Visit NOLO today for your legal needs.

Always examine the fine print, which, when it comes to contracts, means everything! Also, ask for an explanation where you don't understand. Yes, there are more types of contracts, but the logic for a great deal of them remains the same: Read carefully before you pen your signature.

Sample Contracts

Want to read through some basic sample contracts to get a feel for things? Sometimes it helps to read through existing contracts of the same type first. Visit some of these sites to view and download some sample contracts. Of course, it goes without saying that these should never replace legal advice, but can be excellent for extra background.


Take the Next Step:

  • Don't forget to read the fine print before you sign a contract.
  • Get control of your financial life. Subscribe to Financial Independence, a free daily email that provides you with the tools to help you gain that control and achieve financial independence. Subscribers get a copy of Are You Heading for Debt Trouble? A Simple Checklist for FREE!

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